IRS recruits casino workers to track white-collar crime

Aug 5 2010 - 4:27pm

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LAS VEGAS -- Several months ago, Internal Revenue Service agents who investigate financial crimes in Las Vegas began calling big casinos to set up meetings with their employees. The calls were friendly. In fact, the IRS needed the casinos' help. The feds were asking floor workers to drop a dime and report suspicious people gambling with lots of money.

Since the 1980s, Nevada casinos have filed thousands of reports containing the names, Social Security numbers and other identifying characteristics of customers suspected of laundering money or simply gambling with ill-gotten funds.

Those figures are rising in the recession and appear to coincide with increased financial crimes across the country.

"A lot of people come to Vegas to live large ... including a small group of people who engage in crime," said Paul Camacho, IRS special agent in charge of criminal investigations in Las Vegas.

"Mortgage fraud and Ponzi schemes have added a new dynamic. This isn't just the drug dealer, pimp or organized-crime figure. It's the guy who stole the money from the church or from Grandma."

By all accounts, Nevada casinos are fulfilling their basic duties under federal money-laundering laws requiring them to report customers who bet, deposit or buy-in at the cage for $10,000 or more or engage in suspicious-looking gambling transactions of at least $5,000, such as exchanging cash for checks without gambling.

The latter is probably the more valuable tool for law enforcement because it obliges casino employees to make expert, on-the-spot judgments of suspicious transactions.

After years of interacting with gamblers, casino workers are skilled readers of body language and financial funny business, the IRS says.

Still, the reporting process is fraught with pitfalls. Many casino employees -- unaware that such reports are reviewed by the IRS to catch crooks -- view reporting as pointless busywork.

"If you don't think your job has any value, you're not going to be passionate about it," Camacho said.

The meetings with gaming workers were not a mere public-relations effort by an agency that has suffered from a disagreeable image in Las Vegas, where casino workers once fought against taxing tip income and endured mass audits for underreporting tips.

Instead, the IRS had a practical and upbeat message for casino employees: If you see something suspicious, call us before a suspect gambles or disposes of illegal money.

Rather than waiting for so-called "suspicious activity reports" to roll in from casinos, which have 30 days to act, the IRS wants employees to phone right away.

Nevada casinos filed 3,204 reports in 2008 -- a record -- compared with 2,563 in 2007. Casinos filed 1,628 reports in the first six months of 2009. (Figures for the second half of the year aren't yet available.)

Reports can red-flag a gambling stash that doesn't mesh with a customer's tax returns, or alert authorities to a pattern of suspicious transactions, such as large wire transfers, that could indicate a scam.

A tipoff from the front lines, the IRS says, would let agents watch gamblers spend money and interact with others in the casino -- first-person evidence to build the government's case against a corporate embezzler, drug smuggler or ordinary thief.

To speed the process, the IRS assigned agents to specific Strip casinos and distributed the agents' phone numbers to casino workers.

The IRS is also asking casino employees to Google the names of customers making large or suspicious-looking transactions to determine whether they're under investigation.

Some notorious cases involved years of gambling before suspects were arrested -- inviting questions about whether employees would have known of their customers' illegal activity based on their gambling history or other behavior while in Las Vegas.

Federal prosecutors allege a Fry's Electronics executive solicited kickbacks from vendors eager to sell their products at Fry's stores, then wired $121.8 million into accounts controlled by MGM Grand and Las Vegas Sands over nearly four years to finance a high-rolling lifestyle. The executive, Ausaf Umar Siddiqui, pleaded not guilty last year, and the case is ongoing.

San Francisco tax accountant Roberto Heckscher, prosecutors say, initiated one of the longest-running Ponzi schemes in American history, bilking working-class families and the elderly of tens of millions and financing regular trips to Las Vegas, Lake Tahoe and Atlantic City as early as the 1980s. He was recently sentenced to 20 years in prison after pleading guilty.

State and federal authorities won't say whether transaction reports contributed to these arrests, although their gambling activity probably would have generated Currency Transaction Reports for deposits of more than $10,000 in a 24-hour period.

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